Government of India has offered to sell (re-issue) four dated securities for notified amount of ₹ 15,000 crore as per the following details:

Sr No

Security

Notified Amount (in ₹ crore)

GoI Notification

Auction Date

Settlement date

1

GoI FRB 2024

3,000

F.No.4(7)-W&M/2017 dated September 25, 2017

September 29, 2017 (Friday)

October 3, 2017 (Tuesday)

2

6.79% GS 2027

8,000

3

7.73% GS 2034

2,000

4

7.72% GS 2055

2,000

Total

15,000

The auction for securities will be price based using multiple price method. The Reserve Bank of India at Mumbai will conduct the auctions. The salient features of the auctions and the terms and conditions governing the issue of the Stocks are given in the notification (copy enclosed), which should be read along with the General Notification F. No. 4 (13)–W&M/2008, dated October 8, 2008 issued by Government of India.

2. We wish to draw your attention, in particular, to the following:

(i) The Stocks will be issued for a minimum amount of ₹ 10,000/- (nominal) and in multiples of ₹ 10,000/- thereafter.

(ii) In all the auctions, Government Stock up to 5% of the notified amount of sale will be allotted to the eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities. Each bank or PD on the basis of firm orders received from their constituents will submit a single consolidated non-competitive bid on behalf of all its constituents in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. Allotment under the non-competitive segment to the bank or PD will be at the weighted average rate of yield/price that will emerge in the auction on the basis of the competitive bidding.

(iii) Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on September 29, 2017. Bids in physical form will not be accepted except in extraordinary circumstances. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.00 noon.

(iv) An investor can submit more than one competitive bid at different prices in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.

(v) On the basis of bids received, the Reserve Bank will determine the minimum price up to which tenders for purchase of Government Stock will be accepted at the auctions. Bids quoted at rates lower than the minimum price determined by the Reserve Bank of India will be rejected. Reserve Bank of India will have the full discretion to accept or reject any or all bids either wholly or partially without assigning any reason.

(vi) The result of the auctions will be announced on September 29, 2017 (Friday) and payment by successful bidders will be on October 3, 2017 (Tuesday).

(vii) The Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate. Interest on the Government Stock will be paid half-yearly.

(viii) The Government Stocks will be repaid at par on November 07, 2024; May 15, 2027; December 19, 2034, and October 26, 2055 respectively.

(ix) The Stocks will qualify for the ready forward facility.

(x) The Stocks will be eligible for “When Issued” trading during the period September 26 - September 29, 2017, in accordance with guidelines on ‘When Issued’ transactions in Central Government Securities issued by Reserve Bank of India vide circular No.RBI /2006-07/178 dated November 16, 2006 as amended from time to time.

Government of India Ministry of Finance Department of Economic Affairs Budget Division

New Delhi, dated September 25, 2017

NOTIFICATION

Auction for Sale (Re-issue) of Government Stock (GS)

F.No.4(7)W&M/2017: Government of India hereby notifies sale (re-issue) of the following Government Stocks:

Name of the Security

Date of Original Issue

Tenure (yy-mm-dd)

Date of Maturity

Base

Method

Notified Amount (in ₹ Crore)

GoI FRB 2024

Nov 07, 2016

08-00-00

Nov 07, 2024

Price

Multiple

3000

6.79% GS 2027

May 15, 2017

10-00-00

May 15, 2027

Price

Multiple

8000

7.73% GS 2034

Oct. 12, 2015

19-02-07

Dec. 19, 2034

Price

Multiple

2000

7.72% GS 2055

Oct. 26, 2015

40-00-00

Oct. 26, 2055

Price

Multiple

2000

The sale will be subject to the terms and conditions spelt out in this notification (called ‘Specific Notification’). The Stock will be sold through Reserve Bank of India, Mumbai Office, Fort, Mumbai- 400 001 as per the terms and conditions specified in the General Notification F.No.4(13)–W&M/2008, dated October 8, 2008 issued by Government of India.

Allotment to Non-competitive Bidders 2. The Government Stock up to 5% of the notified amount of the sale will be allotted to eligible individuals and institutions as per the enclosed Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities (Annex).

Place and date of auction 3. The auction will be conducted by Reserve Bank of India, Mumbai Office, Fort, Mumbai-400 001 on September 29, 2017. Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on September 29, 2017. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.00 noon.

When Issued Trading 4. The Stock will be eligible for “When Issued” trading in accordance with the guidelines issued by the Reserve Bank of India.

Date of issue and payment for the stock 5. The result of the auction shall be displayed by the Reserve Bank of India at its Fort, Mumbai Office on September 29, 2017. The payment by successful bidders will be on October 3, 2017 i.e. the date of re-issue. The payment for the stocks will include accrued interest on the nominal value of the Stock allotted in the auction from the date of original issue / last coupon payment date to the date upto which accrued interest is due as mentioned in the table in para 6.

Payment of Interest and Re-payment of Stock 6. Interest will accrue on the nominal value of the Stock from the date of original / last coupon payment and will be paid half yearly. The Stock will be repaid at par on date of maturity.

Name of the Security

Coupon rate (%)

Date of Original Issue / Last Coupon payment

Date upto which accrued interest is due

Date of Coupon payments (month / date)

GoI FRB 2024

Variable*

May 07, 2017

October 2, 2017

Nov 07 and May 07

6.79% GS 2027

6.79

May 15, 2017

October 2, 2017

Nov 15 and May 15

7.73% GS 2034

7.73

June 19, 2017

October 2, 2017

Dec 19 and June 19

7.72% GS 2055

7.72

April 26, 2017

October 2, 2017

Oct 26 and April 26

*(i) The interest at a variable rate will be paid every half-yearly.

(ii) The variable coupon rate for payment of interest on subsequent semi-annual period shall be the average rate rounded off up to two decimal places, of the implicit yields at the cut-off prices of the last three auctions of Government of India 182 day Treasury Bills, held up to the commencement of the respective semi-annual coupon period. The implicit yields will be computed by reckoning 365 days in a year.

(iii) In the event of Government of India 182-day Treasury Bill auctions being discontinued during the currency of the Bonds, the coupon rate will be the average of Yield to Maturity (YTM) rates prevailing for six month Government of India Security/ies as on the last three non-reporting Fridays prior to the commencement of the semi-annual coupon period. In case particular Friday/s is/are holiday/s, the yield to maturity rates as on the previous working day shall be taken.

(iv) The rate of interest payable half yearly on the Bonds during the subsequent years shall be announced by the Reserve Bank of India before the commencement of the relative semi-annual coupon period.

b) Make an investment of more than 10 per cent of the unit capital of a Real Estate Investment Trust/Infrastructure Investment Trust subject to overall ceiling of 20 per cent of its net worth permitted for direct investments in shares, convertible bonds/ debentures, units of equity-oriented mutual funds and exposures to Alternative Investment Funds.

c) Hold more than 10 per cent of the paid up capital of a company, not being its subsidiary engaged in non-financial services or 10 per cent of the bank’s paid up capital and reserves, whichever is lower.

Provided investments in excess of 10 per cent but not exceeding 30 per cent of the paid up share capital of such investee company shall be permissible in the following circumstances:

the investee company is engaged in non-financial activities permitted for banks in terms of Section 6(1) of the Banking Regulation Act, 1949; or

the additional acquisition is through restructuring of debt or to protect the banks’ interest on loans/investments made to a company. The bank shall submit a time bound action plan for disposal of such shares within a specified period to RBI.

d) Hold along with its subsidiaries, associates or joint ventures or entities directly or indirectly controlled by the bank; and mutual funds managed by Asset Management Companies (AMCs) controlled by the bank, more than 20 per cent of the paid up share capital of an investee company engaged in non-financial services. However, this cap does not apply to the cases mentioned at 5(a)(v)(c)(i) and (ii) above.

e) Make any investment in a Category III Alternative Investment Fund (AIF). Investment by a bank’s subsidiary in a Category III AIF shall be restricted to the regulatory minima prescribed by SEBI.”

2. Para 5(a)(vi)(b) is being amended to read as under:

“investments in excess of 10 per cent in non-financial companies acquired in circumstances as mentioned at 5 (a) (v) (c) (ii) above.”

3. Para 5(b)(i)(b) is being amended to read as under:

“The bank has the minimum prescribed capital (including Capital Conservation Buffer) and has also made a net profit in that immediate preceding financial year; and.”

4. Section 5(b)(i)(d) is being amended to read as under:

“The aggregate shareholding of the bank along with shareholdings, if any, by its subsidiaries or joint ventures or other entities directly or indirectly controlled by the bank, is less than 20 per cent of the investee company’s paid up capital.

Explanation: Prior approval of RBI shall not be required if the investments in the financial services companies are held under the ‘Held for Trading’ category and are not held beyond 90 days.”

5. In Para 5(b), the following is being added as (iii):

“(iii) investment of more than 10 per cent of the paid up capital/ unit capital in a Category I/ Category II Alternative Investment Fund.”

6. A new Para 5(c) is being inserted after Para 5(b), which reads as under:

“Banks shall ascertain the risks arising on account of equity investments in Alternative Investment Funds done directly or through their subsidiaries, within the Internal Capital Adequacy Assessment Process (ICAAP) framework and determine the additional capital required which will be subject to supervisory examination as part of Supervisory Review and Evaluation Process. This shall also be applicable to sponsoring of Infrastructure Debt Funds by banks.”

7. The explanation to Para 7(d) is being amended to read as under:

“Explanation: This shall not apply to the investments made by a Category I and II AIF set up by the subsidiary.”

13. A new Para 21(c) is being inserted after Para 21(b), which reads as under:

“No bank shall become a Professional Clearing Member of the commodity derivatives segment of SEBI recognised exchanges unless it satisfies the prudential criteria (as given in Para 21(a) (i) to (iv)) and shall do so subject to the following conditions:

The bank shall satisfy the membership criteria of the stock exchanges and comply with the regulatory norms laid down by SEBI and the respective stock exchanges.

The bank shall, with the approval of Board, put in place effective risk control measures, prudential norms on risk exposure in respect of each of its trading members, taking into account their net worth, business turnover, etc.

The bank shall not undertake trading in the derivative segment of the commodity exchange on its own account and shall restrict itself only to clearing and settlement transactions done by the trading members/ clients on the exchange.

The bank shall take exposure on its trading members as per the policy approved by its board.

The bank may fulfill pay-in obligations arising out of trades executed by its clients, as clearing member of the exchange subject to the condition that the total exposure which the bank would take on its registered clients should be determined by the Board in relation to the net worth of the bank and should be monitored regularly. However, the bank shall not meet pay-in obligations of any transaction other than what is required in its role as a Professional Clearing Member.

The bank shall ensure strict compliance with various margin requirements as may be prescribed by the Bank’s board or the Commodity Exchanges as also the extant RBI guidelines regarding guarantees issued on behalf of commodity brokers.”

14. A new Para 22 is being inserted in the MD which reads as under:

“22. Broking services for Commodity Derivatives Segment

(a) No bank shall offer broking services for the commodity derivatives segment of SEBI recognised stock exchanges except through a separate subsidiary set up for the purpose or one of its existing subsidiaries and shall do so subject to the following conditions:

The subsidiary shall, with the approval of its Board, put in place effective risk control measures including prudential norms on risk exposure in respect of each of its clients, taking into account their net worth, business turnover, etc.

The subsidiary shall not undertake proprietary positions in the commodity derivatives segments.

The subsidiary shall ensure strict compliance with various margin requirements as may be prescribed by SEBI, its own board or the Commodity Exchanges.”

Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to the provisions contained in paragraphs 2 and 8 of A.P. (DIR Series) Circular No.60 dated April 13, 2016 on issuance of Rupee denominated bonds overseas and paragraphs 3.2 and 3.3.9 of Master Direction No.5 dated January 1, 2016 on “External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers”, as amended from time to time.

3. Consequently, reporting requirement in terms of paragraph 8 (additional email reporting of RDB transactions for onward reporting to depositories) of A.P. (DIR Series) Circular No. 60 dated April 13, 2016 has been dispensed with. However, it should be noted that the reporting of RDBs will continue as per the extant ECB norms.

4. All other aspects of the ECB policy remain unchanged. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers.

6. The directions contained in this circular have been issued under section 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time.

2. Currently, the limit for investment by Foreign Portfolio Investors (FPIs) in corporate bonds is ₹ 244,323 crore. This includes issuance of Rupee denominated bonds overseas (Masala Bonds) by resident entities of ₹ 44,001 crore (including pipeline). The Masala Bonds are presently reckoned both under Combined Corporate Debt Limit (CCDL) for FPI and External Commercial Borrowings (ECBs). On a review, and to further harmonise norms for Masala Bonds issuance with the ECB guidelines, the following changes are made:

With effect from October 3, 2017, Masala bonds will no longer form a part of the limit for FPI investments in corporate bonds. They will form a part of the ECBs and will be monitored accordingly. Eligible Indian entities proposing to issue Masala Bonds may approach Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai as required in terms of A. P. (DIR Series) Circular No.47 dated June 7, 2017.

The amount of ₹ 44,001 crore arising from shifting of Masala bonds will be released for FPI investment in corporate bonds over the next two quarters as specified in Table 1.

Table 1 – Limit for FPI Investments in Corporate Bonds

Amount(₹ crore)

1. Current FPI limits for corporate bonds (including masala bonds)

2,44,323

(a) of which Masala bonds (including pipeline)

44,001

2. FPI limit after shifting Masala bonds to ECB (1-(a))

2,00,322

3. Additional limit for Q3 FY18

27,000

4. FPI limit for corporate bonds from 03 Oct 2017 (2+3)

2,27,322

of which reserved for investment by long term FPIs in infrastructure

9,500

5. Additional limit for Q4 FY18

17,001

6. FPI limit for corporate bonds from January 01, 2018 (4+5)

2,44,323

of which reserved for investment by long term FPIs in infrastructure

9,500

3. An amount of ₹ 9,500 crore in each quarter will be available only for investment in infrastructure sector by long term FPIs (i.e., Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks). The definition of ‘Infrastructure’ shall be the same as defined under the Master Direction on ECBs issued by the Reserve Bank of India. Long term FPIs will continue to be eligible to invest in sectors other than infrastructure.

4. All other existing conditions for investment by FPIs in the debt market remain unchanged.

5. AD Category-I banks may bring the contents of the circular to the notice of their customers/constituents concerned.

6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to circular no.FMD.MSRG.No.75/02.05.002/2012-13 dated March 13, 2013 on the captioned subject wherein a threshold of USD 1 million, and equivalent thereof in other currencies, was stipulated for reporting FCY-INR and FCY-FCY forward and options trades between AD Category-I banks and their clients to the Trade Repository (TR). Subsequently, Clearing Corporation of India Limited (CCIL), in consultation with Reserve Bank on June 02, 2016, had informed its members the removal of this threshold limit for reporting FCY-INR and FCY-FCY option trades w.e.f. July 04, 2016.

2. It has now been decided to remove the threshold for reporting FCY-INR and FCY-FCY forward trades between AD Category-I banks and their clients w.e.f. October 03, 2017.

3. As a one-time measure, in order to update the outstanding balances in the Trade Repository (TR), AD Category-I banks are advised to report the following to the CCIL by October 06, 2017:

OTC currency option transactions between AD Category-I banks and their clients undertaken before April 02, 2013 and outstanding as on September 29, 2017.

OTC currency option transactions between AD Category-I banks and their clients, with value below USD 1 million and equivalent thereof in other currencies, undertaken in the period April 02, 2013 - July 03, 2016 and outstanding as on September 29, 2017.

Currency forward transactions between AD Category-I banks and their clients, with value below USD 1 million and equivalent thereof in other currencies, and outstanding as on September 29, 2017.

4. AD Category-I banks are advised to ensure that outstanding balances between their books and the TR are reconciled on an ongoing basis.

Inclusion of “Suryoday Small Finance Bank Limited” in the Second Schedule to the Reserve Bank of India Act, 1934

We advise that the “Suryoday Small Finance Bank Limited” has been included in the Second Schedule to the Reserve Bank of India Act, 1934 vide Notification No.DBR.NBD.(SFB-Suryoday).No. 766/16.13.216/2017-18 dated July 24, 2017 and published in the Gazette of India (Part III - Section 4) dated September 2, 2017.

Formation of new districts in the State of West Bengal -Assignment of Lead Bank Responsibility

The Government of West Bengal vide Gazette Notification dated March 20, 2017 had notified the creation of a new district “Jhargram” with effect from April 4, 2017 and by Gazette Notification dated March 24, 2017 created a new district “Paschim Bardhaman” with effect from April 7, 2017 in the State of West Bengal. It has been decided to assign the lead bank responsibility of the new districts as detailed below:-

Sr No

Newly carved district

Erstwhile District

Sub Divisions of newly created districts

Lead Bank Responsibility assigned to

District Working Code allotted to new district

1

Paschim Medinipur

Paschim Medinipur

Medinipur Sadar, Kharagpur, Ghatal

United Bank of India

112

2

Jhargram

Paschim Medinipur

Jhargram Sadar

United Bank of India

398

3

Purba Bardhaman

Purba Bardhaman

Bardhaman Sadar North, Bardhaman Sadar South, Katwa, Kalna

UCO Bank

399

4

Paschim Bardhaman

Purba Bardhaman

Asansol Sadar, Durgapur

State Bank of India

403

2. The District Working Code of the new districts have been allotted for the purpose of BSR reporting by banks.

3. There is no change in the lead bank responsibilities of the other districts in the State of West Bengal.

Change in name of “Gopinath Patil Parsik Janata Sahakari Bank, Ltd., Thane ” to “GP Parsik Sahakari Bank Ltd, Kalwa, Thane “ in the Second Schedule to the Reserve Bank of India,1934

We advise that the name of “Gopinath Patil Parsik Janata Sahakari Bank, Ltd., Thane” has been changed to “GP Parsik Sahakari Bank Ltd, Kalwa, Thane“ in the Second Schedule to the Reserve Bank of India,1934 by Notification DCBR.RAD. (PCB). Not. No. 1/08.02.205/2016-17 dated March 15, 2017 published in the Gazette of India (Part III-Section 4) dated September 2, 2017.